Many people view divorce as a painful financial reversal. There’s no doubt that the shift from being part of a two-income household with shared living expenses to a single-earner status poses numerous financial challenges to people at most income levels. But as a recent article, 7 Little-Known Financial Benefits of Divorce in U.S. News and World Report points out, the separation of finances ultimately can be positive, too. Here are some of the perks:
1. Freedom to make independent decisions about money.
Married couples fight about money more than any other subject, many studies show. Now, those decisions are up to you. No longer needing to consult with a spouse about purchases and investments can feel liberating. Likewise, even when a divorce requires belt-tightening, knowing that your money is safe from a former partner’s spending habits can be a relief. Having control over your money makes it much easier to live on a budget.
2. Early access to retirement funds and Social Security spousal benefits.
One little-known financial silver lining is the ability to withdraw funds from your retirement account without paying a 10% penalty if you are younger than 59 ½ years old. Ask your attorney about including a qualified domestic relations order as part of the divorce settlement. In addition, if you were married for at least 10 years and your former spouse is now age 62 or over, you could be eligible to claim Social Security spousal benefits. However, if you get remarried, you won’t be eligible for this benefit.
3. Setting new priorities.
Divorce can mean re-thinking what you value, not just what you can afford. Going it alone may mean scaling back on dinners out, moving to a less expensive neighborhood, or sitting down with a financial advisor to deal with debts and recalibrate your retirement savings. But it can also mean spending more time and money on the things, people and long-range goals you truly care about. Now is the time to start planning for a dream your ex-spouse did not share.
Although divorce does present numerous financial challenges, sometimes the most important changes are in our mindset. Sound legal and financial advice, a budget, and long-range plan can help a newly-divorced person weather current money hurdles, and lead to a positive bottom line and happier outlook in a not-too-distant future.
With a combined 30 years in family law, the attorneys at Jones Family Law Group, LLC, will provide the legal guidance you need. For questions or to schedule a confidential consultation, call 314-449-8830.